From "ecological anti-reverse" to "extremely intelligent and technologically luxurious", Jia Yueting's outstanding ability to tell stories has always earned enough market attention for his companies and products.
However, there is only a grand prospect, which seems to be difficult to touch the rational capital market. Faraday Future (NASDAQ: FFIE), a new energy vehicle company founded by it, has become a "penny stock" because its stock price has been below $1 for a long time. Jia Yueting has recently launched a combination of a reverse stock split + a US$300 million financing plan for Starkey's listing seats and easing operating pressures such as production capacity climbing.
Although Faraday Future's financing moves in recent years have been frequently considered "cutting leeks", this time may have a different meaning from the previous ones.
In April this year, the first mass-produced car of Faraday Future FF91 officially rolled off the production line in Los Angeles, USA, and the product competitiveness is not weak, and the market feedback is good.
Only one week after the announcement of the financing plan, on June 27, Faraday Future successfully obtained a financing commitment of US$105 million. This round of investment was led by existing investor ATW Partners Funds and participated by Senyun International. The funding commitment will support the continued production and delivery of Faraday Future's highly anticipated FF91 electric vehicle and help the company achieve its long-term strategic goals.
From this point of view, the investment value of Faraday Future may be emerging.
New car bounces, stock price crashes Faraday Future is "coming soon"?
At present, Faraday Future is under great pressure in the stock market. As early as September 2022, its stock price fell below $1. At the beginning of 2023, the stock price briefly rebounded above $1, but it fell below $1 again on February 7. Hovering at a low level, it became a "penny stock". In contrast, Tesla's stock price has risen for 11 consecutive years this year, nearly doubling the increase. According to the pre-market trading stock price on June 28, the market value has reached 793.042 billion US dollars.
In addition to Tesla, the stock prices of BYD and other new energy car companies have also maintained good performance, indicating that capital is highly optimistic about the future of the track, while Faraday Future obviously failed to enjoy the high prosperity of the industry. In the final analysis, the reason why it is not paid by capital is that there is a big gap between vision and reality.
In 2023, new energy passenger vehicles will account for 20% of total sales in megacities, a year-on-year decrease of 3 percentage points. In some small and medium-sized cities and counties and townships, the proportion of new energy passenger vehicle sales has continued to increase in recent years, indicating that the industry has grown. Gradually penetrate into the sinking market with a large population base, poor public transportation, and strong market demand.
Under such an industry background, capital is more concerned about the ability of various car companies to seize the sinking market. For consumers in second- and third-tier cities and county and township markets, cost-effectiveness is an important consideration. Therefore, since the beginning of the year, automakers such as Tesla, BYD, and Great Wall have announced price cuts to increase the attractiveness of their products to sinking markets. , in order to rapidly increase market share.
At such an industry node, Faraday Future is still a storytelling bystander, drawing a blueprint to capital, but failing to realize it, which can be seen from the difficulty of mass production.
On June 20, the company announced that the delivery date of the second phase of the new car FF91 2.0 Futurist Alliance will be updated from the end of the second quarter of 2023 to August 2023. This is the second "skip ticket" after the first delivery failed before the end of April this year. . Also because it failed the market’s expectations, on the day the news was released, Faraday Future’s stock price fell 37% intraday.
In fact, Faraday Future, founded in 2014, is "same age" as "Wei Xiaoli", but Weilai's product line has completed the transition from 866 (ES8, ES6, EC6) of the first-generation platform to 775 ( ET7, ES7, ET5), and Faraday Future has not yet delivered mass-produced vehicles due to lack of funds and insufficient control over the supply chain.
On the whole, Faraday Future is facing the "triple gate" of stock price downturn, product testing and mass production problems, and in order to get out of the predicament, it is also actively helping itself, planning to conduct a reverse stock split of the company's common stock to stimulate the stock price and accelerate the stock price. Additional system testing related to enhanced safety testing of a single unique product function for a new vehicle. At the same time, the company also stated that it will further raise 300 million US dollars to promote mass production.
Under the circumstances that the market is not optimistic, Faraday Future is still firmly playing this set of "combined punches". What is the confidence?
Behind Faraday Future's struggle to save itself is its determination of product strength?
When Faraday Future's products bounced and its stock price was hurt, founder Jia Yueting once published a long article on Weibo, admitting that the company is currently encountering the problems of insufficient industrialization and financing capabilities, and also pointed out Faraday Future's existence. Development opportunities, that is, to break the capital bottleneck through share merger and share expansion, and promote the realization of the "disruptor + pioneer" strategy.
In fact, the operation of reverse stock split is relatively rare, because it means that the company has admitted the fact that the financial situation is not optimistic, and it is easy to cause panic selling in the secondary market. However, in view of the current difficulty in financing and mass production, Faraday Future's announcement of a reverse stock split plan also means that the company has come to a "last stand" moment.
The company's confidence in struggling to save itself may come from its determination of product strength.
Take Faraday Future's first mass-produced car, the FF91, as an example. Since the advent of FF91, the market has given high praise to this product. In the United States, Tesla's "base camp", FF91 has refreshed the record of Willow Springs, a famous track in the west of the United States. In terms of performance, FF91's zero-to-hundred-speed acceleration is 2.39 s, while Tesla’s Model X performance version has a 0-100 score of 2.9s. Jia Yueting himself also released a number of test drive videos, saying "it's so cool to drive". In addition, it is worth mentioning that the FF91, which is priced at US$309,000 and limited to 300 units worldwide, was sold out at the press conference. It can be seen that Faraday Future does have certain product advantages.
However, considering factors such as price and channels, Faraday Future's market advantage is not obvious. In terms of price, the price of FF91 is about 2.2 million yuan, which is nearly twice what BYD looks up to U8. In terms of channels, Faraday Future plans to open 20 flagship stores around the world by 2025, while Tesla now has 378 directly-operated stores around the world, and BYD currently has a total of 2,855 stores.
Under such circumstances, can Faraday Future's vision of becoming a "disruptor + pioneer" in the industry really come true? In addition to products, what kind of confidence can it give the market?
After nine years of hard work, the financing value of Faraday Future may be emerging
The new energy vehicle track has officially entered the knockout stage. Wang Chuanfu, chairman of BYD, believes that major changes will take place in the auto industry in the next 3-5 years. Zeng Qinghong, chairman of GAC Group, also pointed out that the auto industry is bidding farewell to the golden age of high growth, and the knockout competition is accelerating.
When the growth rate of an industry slows down, the market begins to adjust deeply, and the characteristics of reshuffle become more and more obvious, whoever can take the lead in understanding and grasping the future trend of the industry will stand out more easily.
At present, the "new four modernizations" of electrification, networking, intelligence, and sharing are recognized future trends in the automotive industry. Compared with fuel vehicles, the power system of new energy vehicles is easier to connect with new Internet forms such as computers and AI. Therefore, the product development of new energy vehicle companies in the future may break away from the single product form of automobiles and evolve into advanced smart mobile terminals.
In essence, this trend is similar to the full AI, full Hyper, omnipotent and co-creation proposed by Faraday Future. In terms of AI, Faraday Future chooses to start with intelligent driving, and plans to integrate its developed artificial intelligence technology with advanced models such as ChatGPT and GPT-4, as well as other models from companies such as OpenAI and Microsoft, and launch a generative AI product group. Applied in smart cockpit.
Considering that ChatGPT is currently the highest level of generative AI, and no other car companies have done so, if this idea can be implemented, Faraday Future is likely to take the lead, but the actual user experience still needs mass production Only after delivery can we really see the outcome.
Therefore, the key lies in mass production and delivery. Fortunately, although Faraday Future lacks funds, its strategic positioning for mass production is relatively clear. Domestically, the different supply advantages of the two markets have been well utilized.
In addition, it is understood that Faraday Future has planned to move its Chinese headquarters to Huanggang, Hubei, while retaining its global headquarters in Los Angeles. In terms of automobile production, Hubei Province has a strong strength. It has the R&D and production capacity of complete vehicles and the development capabilities of key components of three electric vehicles, as well as related talent reserves. In 2022, the output of automobiles will be 1.896 million, of which the output of new energy vehicles will be 293,000, a year-on-year increase of 98%. %. Based on this, Faraday Future may be able to accelerate mass production by integrating regional resources.
On the whole, although Faraday Future is facing huge financial pressure, it also shows that the company has come to a critical period of ramping up production capacity. If you abandon the inherent impression and re-examine Faraday Future, this is actually a rather imaginative company. As Jia Yueting's nine-year persistence is about to usher in the big test of delivery volume, his financing value is also being released at an accelerated rate.
Author: Good blue is not good
Article source: US Stock Research Institute